On Friday, 11 October 2019, APN Convenience REIT (AQR) announced it entered into heads of agreements to acquire 13 service station and convenience retail properties in South Australia, Western Australia, Queensland and Northern Territory for a total consideration of $74.6 million (excluding transaction costs).
The Acquisition Portfolio comprises 11 brand new or under construction strategically located sites plus 2 established sites leased to high quality operators with an on-completion weighted average lease expiry of 13.8 years (as at 30 September 2019) and generating an initial yield of 6.2%.
Key highlights of the acquisitions
- Attractive initial yield of 6.2%, underpinned by a long WALE of 13.8 years (as at 30 September 2019) and 100% occupancy;
- Fixed annual increases of 3.0% providing secure and sustainable long-term income growth;
- Improved tenant and geographic diversification and enhanced overall portfolio quality; and
- Limited capex requirements given 11 of the 13 sites are brand new or under construction.
The Acquisition Portfolio and associated transaction costs will be funded with a combination of debt and equity. To partially fund the Acquisition Portfolio, the Fund is undertaking a fully underwritten institutional placement to raise approximately $38 million at an issue price of $3.39 per new stapled security. The remaining Acquisition Portfolio consideration and associated transaction costs will be funded with bank debt for which credit approved terms have been received.
The Fund will also undertake a non-underwritten security purchase plan (SPP) to eligible securityholders1 in Australia and New Zealand to raise up to $5 million2 at the same issue price as the Placement to repay debt and to support AQR’s core business activities.
Security Purchase Plan (SPP)
Eligible Securityholders in Australia and New Zealand will be invited to subscribe for up to $30,000 of New Securities, free of brokerage and transaction costs, via a SPP. The New Securities to be issued under the SPP will be offered at the same price as the New Securities to be issued under the Placement, a fixed price of $3.39 per New Security. The SPP will not be underwritten and is expected to raise up to $5 million3.
Further information on the SPP will be lodged with the ASX and sent to Eligible Securityholders on or around 21 October 2019.